PAYE Tax and TA Pay

Discussion in 'Army Reserve' started by Blockhead, May 10, 2007.

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  1. Apologies if this topic has already been posted, but it is probably worthwhile anyway.

    If your earnings in 2007/08 from TA plus your normal employment earnings can expect to be more than £34,600 plus your personal allowance of £5,225 (i.e £39,825) you will be required to pay higher rate tax (40%) on the amount over that total.

    (The higher rate tax band for 2006/07 is £33,300 to which you would add your personal allowance of £5,035.)

    It is worthwhile making a call to your tax office to ask them to check your tax code to ensure that you do not end up having to repay tax.

    It may also be worthwhile looking at your earnings for last year from your P60 - these are now available on ArmyNet, at least mine is.
  2. As far as I know your tax code is only applied to your main employment and TA pay gets taxed at a standard rate for everyone - which if you have to pay 40% tax means you always end up owing tax each year because they don't take enough off you.
  3. According to Tax Office lady at Centre 1 today, they can arrange for a re-coding for both your primary and secondary employments. It is what she is arranging for me. This should, i am assured (!!!) mean i will pay the right amount however if i pay too much then i will be able to reclaim - I hope.

    The point though is that if your primary employment on its own does not take you into the higher tax bracket you need to be aware that it plus your TA pay may do. In which case you will owe the tax man if you don't take the action i've outlined above.!
  4. Correct. That BR in the tax code box on TA Pay slips stands for "Basic Rate" and means that tax at basic rate is deducted from all your pay, regardless of personal allowances and any other taxable income you may have.

    This means that anyone with the TA as their sole source of income is likely to be overtaxed (because personal allowances and the 10% rate are not applied) and will get a refund around 1 year after the end of the applicable tax year while those whose combined taxable income takes them into the higher tax band will receive a nice letter around the same time inviting them to send a cheque and/or possibly adjusting their tax code for a future year(s). Top tip - stick around 30% of your net TA pay into a regular savers account to avoid future financial embarassment.

    Edited to add

    Blockhead - your TA pay slip should say "D0" in future which will deduct tax at the higher rate from all your TA pay
  5. As far as I know this does not happen automatically, you have to apply for it with evidence of your pay in the form of all P60's for the year concerned.

    Any of you Inland revenue scum ( :p just in case you are a sensitive sort of scum...) out there care to confirm or deny?
  6. Well it sort of balanaces out with NI contributions. I think the sensible answer is to pay TA at BR rate & NI rates and let them off, those relying on TA pay should get a proper job. Less paper work for little gain
  7. It will arrive eventually whether you ask for it or not and possibly with interest , depending on how long it has taken.

    By the way,the Inland Revenue was replaced by HM Revenue and Customs some time ago. I have no connection with them other than that we correspond on a regular basis.
  8. But the tax man is happy for you to sort this out after the financial year has finished.

    If you are taxed at BR, and you should be in the higher rate, then you get an interest free loan for a few months, before you eventually pay the correct tax. Not the worst problem in the world. :)

    If you do switch to higher rate for your TA pay, make sure your NI coding changes too. The income tax & NI people didn't used to speak to each other too much. Not sure if this has changed.
  9. I would strongly advise against relying on HMRC to note that you have paid too much tax. Be proactive, and contact them if you feel you've overpaid.

    Oh, and the interest they pay is very poor - another incentive to move quickly to resolve such matters.
  10. Blockhead! On reading this I thought, i'll just check my P60s for last year, and guess ******* what? They owe me a grand! Hell Yeah!

    Beers on me! Cheers!